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This Just In! Loan Limits will be Increasing!

by Southern Californias Top Producing Mother & Son Te

WASHINGTON - A component of the U.S. government's tentative economic stimulus package announced Thursday would give an immediate lift to buyers and sellers in higher-priced housing markets.

The package agreed upon by Democratic and Republican members of the House would allow government-sponsored Fannie Mae and Freddie Mac to buy mortgages 50 percent more expensive than the current $417,000 (euro284,389) limit. The Senate and White House still must sign off on the proposed stimulus plan, which also includes tax rebates for Americans.

House Speaker Nancy Pelosi and Republican Leader John Boehner of Ohio announced the deal in a press conference Thursday.

The higher cap of $625,000 (euro426,243), to apply for one year, would breathe life into housing markets in New York, California and other pricey areas because lenders would feel more comfortable knowing Fannie and Freddie can buy and package the loans into securities that investors consider to be relatively safe.

A Freddie Mac spokesman said in an e-mail message that such an increase "would be in the best interest of the market and consumers."

To address the mortgage crisis, the package also raises limits on Federal Housing Administration loans, which are insured by the government in event of default, congressional aides said.

Groups representing Realtors, bankers and home builders, which have been hit hard by the mortgage market downturn, have been lobbying for such changes for months.

The National Association of Realtors has been pushing for a permanent expansion of the Fannie and Freddie limits to $625,000 (euro426,243). It calculates that borrowers could save $3,000 (euro2,046) to $5,000 (euro3,410) per year in reduced interest costs as a result and projects up to 210,000 foreclosures could be prevented since refinancing into lower-rate loans would be easier.

Dale Stinton, the group's chief executive, said in a statement Thursday that increasing the loan limits "is a truly meaningful economic stimulus and should be enacted quickly."

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by Southern Californias Top Producing Mother & Son Te

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We are very happy with FindYourEpiphany.com and their services and that's why we have asked them to be our sponsors. 

FED Cuts interest rates 3/4 of a point!

by Southern Californias Top Producing Mother & Son Te

WASHINGTON - The Federal Reserve unexpectedly slashed a key interest rate by a bold three-fourths of a percentage point on Tuesday, responding to a global plunge in stock markets that heightened concerns about a recession. The Fed signaled that further rate cuts were likely.

 

The reduction in the federal funds rate from 4.25 percent down to 3.5 percent marked the biggest reduction in this target rate for overnight loans on records going back to 1990. It marked the first time that the Fed has changed rates between meetings since 2001, when the central bank was battling the combined impacts of a recession and the terrorist attacks.

 

Federal Reserve Chairman Ben Bernanke and his colleagues approved the large rate cut after an emergency video conference on Monday night, a day when global markets had been pounded by rising concerns that weakness in the world's largest economy was spreading worldwide.

 

Despite the Fed's bold move, Wall Street plunged at the opening with the Dow Jones industrial average down 465 points before stocks began to rebound. The Dow was down 120 points in afternoon trading, an indication that the Fed's effort to calm markets was having an impact.

 

In a brief statement explaining its move, the Fed said that "appreciable downside risks to growth remain" and officials pledged to "act in a timely manner" to deal with the risks facing the economy. The action was approved on an 8-1 vote.

 

Analysts said the fact that the Fed did not wait until its meeting next week to cut rates underscored the seriousness of the situation.

 

"The world's stock markets are in meltdown so the Fed came in with an inter-meeting move to try to stop the panic," Christopher Rupkey, senior economist at Bank of Tokyo-Mitsubishi.

 

The Bush administration, which had announced on Friday that President Bush supported a $150 billion economic stimulus package, said Tuesday that it was not ruling out doing more than the $150 billion proposal if necessary. Bush and Treasury Secretary Henry Paulson were conferring with congressional leaders at the White House on Tuesday, with all sides saying they want to reach agreement quickly.

 

The Fed was expected to cut rates further, possibly as soon as their next meeting on Jan. 29-30, if there are continued signs that the economy is weakening.

 

"This move by the Fed was essential," said Lyle Gramley, a former Fed governor who is now a senior analyst with the Stanford Financial Group in Washington. "Bernanke promised in a speech earlier this month to take substantive action in a timely and decisive manner."

 

Gramley said that Bernanke was now exercising the kind of forceful leadership the markets had been hoping to see since the credit crisis hit in August.

 

David Jones, chief economist at DMJ Advisors, said Fed officials have a range of options available at next week's meeting from a quarter-point move to a half-point move to holding rates steady but indicating the Fed is prepared to move again between meetings should conditions deteriorate further. Jones predicted the Fed would lower the funds rate to 3 percent by the end of March.

 

In addition to cutting the funds rate, the Fed said it was reducing its discount rate, the interest it charges to make direct loans to banks, by a similar three-quarters of a percentage point, pushing this rate down to 4 percent.

 

Commercial banks responded to the Fed's action on the funds rate by announcing similar cuts of three-quarter of a percent on its prime lending rate, the benchmark for millions of business and consumer loans. The action will mean the prime lending rate will drop from 7.25 percent down to 6.50 percent.

 

Global financial markets had plunged Monday as investors grew more concerned about the possibility that the United States, the world's largest economy, could be headed into a recession. Many markets suffered their biggest declines since the September 2001 terrorist attacks.

 

In its statement, the Fed said it had decided to cut the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth."

 

The central bank said that the strains in short-term credit markets have eased a bit, but "broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets."

 

Before Tuesday's move, the Fed had cut interest rates three times, beginning in September, the month after a severe credit crunch had roiled Wall Street and global financial markets. The Fed cut the funds rate by a half-point in September and then by smaller quarter-point moves in October and December.

 

"The committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risk," the Fed statement said.

 

The Fed's action was approved on an 8-1 vote with William Poole, president the Fed's regional bank, dissenting. The statement said that Poole objected because he did not believe current conditions justified a rate move before the Fed's meeting

No Easy Answer to Mortgage Woes

by Southern Californias Top Producing Mother & Son Te

The Bush administration is working on a number of fronts to combat the country's severe housing crisis but there is no simple solution to the problem, Treasury Secretary Henry Paulson said Monday.

 

Paulson, in remarks prepared for a New York speech, said that the country was facing an unprecedented wave of 1.8 million subprime mortgage which are scheduled to reset to sharply higher rates over the next two years. He said this raised the possibility of a market failure and was the reason the administration brokered a deal with the mortgage industry to freeze certain subprime mortgage rates for five years to allow the housing market to recover.

 

"By preventing avoidable foreclosures, we will safeguard neighborhoods and communities and fulfill our responsibility of protecting the broader U.S. economy," Paulson said in excerpts of his speech released by Treasury. "However, let me be clear: there is no single or simple solution that will undo the excesses of the last few years."

 

Paulson said that the deal the administration brokered with the industry to freeze certain subprime mortgage rates for five years did not involve the use of any taxpayer money. Conservative critics have complained that the administration's plan represented government intrusion in the operation of markets that would end up rewarding some people who had taken out risky mortgages.

 

The steep slump in housing has been a serious drag on the overall economy. There are rising fears that the country could topple into a recession. Those worries were heightened after a report Friday showing that the unemployment rate jumped to a two-year high of 5 percent in December with job growth slowing to a crawl.

 

Paulson called the current housing correction inevitable after what occurred during the five-year boom in which sales and prices climbed to record levels.

 

"After years of unsustainable price appreciation and lax lending practices, a housing correction is inevitable and necessary," Paulson said.

Feds May Expand Mortgage Help Program To Save People from Loosing Their Homes

by Southern Californias Top Producing Mother & Son Te

Treasury Secretary Henry Paulson said Tuesday the administration was exploring what would be a significant expansion of the program to help at-risk mortgage holders.

 

Paulson, in an interview on CNBC, said the administration was involved in discussions with the mortgage industry to expand a current program to freeze adjustable rate mortgages for five years to include borrowers of loans at prime rates. Currently, the rate freeze only covers a much smaller segment of adjustable rate loans, those made to subprime borrowers. Those are borrowers with weak credit histories.

 

"One thing we will consider with the HOPE NOW alliance is ... maybe expanding this beyond subprime borrowers to other borrowers," Paulson said in the CNBC interview.

 

Paulson did not provide any details on when this expansion might go forward. The HOPE NOW alliance is a coalition of mortgage industry companies which are seeking to reach at-risk borrowers to help them avoid foreclosures.

 

The administration last month unveiled its most significant move to date to deal with the mortgage crisis when it brokered an agreement with the mortgage industry to freeze rates on certain subprime mortgages for five years in an effort to help homeowners in danger of losing their homes when their lower introductory rates reset to sharply higher levels in the coming two years.

 

There are 1.8 million subprime mortgages that are scheduled to reset to higher rates this year and in 2009.

 

Paulson in the CNBC interview also called on Congress to quickly pass pending legislation that would reform the Federal Housing Administration, which he said would help 250,000 at-risk homeowners who have adjustable rate subprime mortgages refinance to more affordable loans and another piece of legislation that would expand the availability of so-called "jumbo" mortgages, loans higher than $417,000.

 

The two giant government-sponsored mortgage companies, Fannie Mae and Freddie Mac, cannot presently back these jumbo loans, which restricts their availability.

 

On Monday, Paulson had said in a speech in New York that the current housing correction was "inevitable and necessary" following five years of an unsustainable boom which saw sales and home prices hit record levels.

If you don't own a digital TV set, you NEED to read this!

by Southern Californias Top Producing Mother & Son Te

Millions of $40 government coupons became available Tuesday to help low-tech television owners buy special converter boxes for older TVs that might not work after the switch to digital broadcasting.

Beginning Feb. 18, 2009, anyone who does not own a digital set and still gets their programming via over-the-air antennas will no longer receive a picture.

That's the day the television industry completes its transition from old-style analog broadcasting to digital.

The converter boxes are expected to cost between $50 and $70 and will be available at most major electronics retail stores. Starting Tuesday, the National Telecommunications and Information Administration will begin accepting requests for two $40 coupons per household to be used toward the purchase of the boxes.

Viewers who have satellite or cable service will not need a box.

To request a coupon, consumers can apply online at http://www.dtv2009.gov starting Tuesday. The government also has set up a 24-hour hotline to take requests, 1-888-DTV-2009 (1-888-388-2009).

Congress, in ordering the transition to digital broadcasting, set aside $1.5 billion for the coupon program, which will fund 33.5 million coupons and other costs.

The giveaway basically works under the honor system.

The first 22 million coupons will go to all households that request them. That includes a residence that gets cable service for one television but has a spare TV that still uses an antenna, for example.

The rest of the coupons, however, are meant only for those who do not subscribe to a pay-television service.

The Nielsen Co. estimates that 14.3 million households, or about 13 percent of the 112.8 million total television households in the nation, rely on over-the-air television broadcasts for programming.

Tony Wilhelm, director of consumer education for NTIA, said the agency expects to have enough coupons to satisfy demand. "We think the high number will be 26 million," he said. "Low end is 10 million."

Members of Congress have criticized both the National Telecommunications and Information Administration and the Federal Communications Commission for their work on the transition to digital television.

In November, the Government Accountability Office, Congress' investigative arm, released a report that concluded there is "no comprehensive plan" for the transition.

Most of the concern rests with public education campaigns. While Congress allocated $1.5 billion for the coupon program, only $5 million was for education. The Association for Public Television Stations reported in September that 51 percent of participants surveyed were unaware that the transition was taking place.

Since then, the broadcast industry has announced a voluntary public education campaign. The FCC is circulating a plan among commissioners that would make public education efforts by broadcasters mandatory.

Congress ordered the transition to digital broadcasting to make more efficient use of the publicly owned airwaves.

On Jan. 24, the FCC will auction off the spectrum currently used for analog television. That portion of the airwaves will be sold to wireless providers and is expected to bring in as much as $15 billion. A portion of the spectrum will also be dedicated for use by emergency responders.

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Photo of The Mother & Son Team - Maria Palacios & Chris Gon Real Estate
The Mother & Son Team - Maria Palacios & Chris Gon
Berkshire Hathaway HomeServices, California Properties
16911 Bellflower Blvd
Bellflower CA 90706
(877) 883-1003
Fax: 562-381-9113